retirement preparation three legged stool

Most employees of Texas agencies become members of the ERS retirement plan as soon as they start working.
Note: Employees of higher education institutions do not participate in the ERS retirement program. Visit the Higher Education Employees page for more information.

Employees and the state contribute roughly equal percentages of their salaries to the ERS Retirement Trust Fund. Throughout your career, ERS invests the money in the Trust Fund to increase its value. ERS focuses on different types of investments in many industries for long-term earnings and stability. As a result, almost two-thirds of retirement annuities are paid with investment earnings. It is a great value for the state, members and taxpayers, who help fund the state’s contribution.
The state retirement plan is a defined benefit plan. That means, when you choose to retire after reaching eligibility, you will get a monthly payment (or annuity) for the rest of your life – no matter how long you live. In general, defined benefit retirement plans provide the same or better benefits than 401(k)-type defined contribution plans, at about half the cost.
Your eligibility to retire and the amount of your annuity depend on your hire date, years of service, age and salary. Once you retire, you will have a stable monthly annuity from ERS. However, it is only one part of a financially secure retirement.
When planning for retirement, State of Texas employees should keep in mind that the average retirement annuity is about half of the retiree’s working salary. Also, automatic cost-of-living adjustments (COLAs) are not included in the plan, and many retirees have higher health care costs as they get older. With this in mind, employees should plan to have at least two other sources of income in retirement. We call this the “three-legged stool” of retirement income:

  • The defined benefit plan provides each retiree with a regular monthly payment for life.
  • Social Security makes up another portion of retirement planning.
  • Personal savings, like an individual retirement account or 401(k), are important for members to supplement their State of Texas Retirement and Social Security. ERS offers the Texa$aver 401(k) / 457 Program℠, a voluntary retirement savings program with lots of investment opportunities and lower-than-average fees.

Find out more about retirement benefits and retirement planning.